Bharti Airtel expects the entry of Reliance Jio Infocomm to shake up the market, but says it is battle-ready to face off with the competitor.Anandita Singh Mankotia | ET Bureau | May 06, 2016, 07:56 IST

EW DELHI: Bharti Airtel expects the entry of Reliance Jio Infocomm to shake up the market, but says it is battle-ready to face off with the competitor that is predicted to come up with cheap tariffs. Gopal Vittal, Bharti Airtel CEO for India and South Asia, said he expects the Reliance Industries unit to make a “forceful launch”, but show “semblance of rationality” in pricing its services.

Reliance is a “prudent company which seeks returns for its shareholders and investments”, Vittal told ET in an interview, explaining the rationale behind this view. Airtel, the nation’s No.1 telecom operator by revenue and number of customers, is used to pricing pressures, he said.

But he knows the intensity would be different this time.To overcome the challenge, he said, the company will sharpen its focus on the customer.

“The fact is that there is a new entrant coming in. This is a large competitor with massive capacity. There will be a shakeup in this market,” Vittal said. “We respect all our competitors but our obsession is our customers. At the end of the day that’s what matters.”

As reported last month by ET, Jio is currently offering a tariff rate of half a paisa per 10 kb of data usage to its own employees before the commercial launch, substantially lower than the 4 paise charged by India’s top telcos: Airtel, Vodafone India and Idea Cellular. Analysts said the tariffs appeared to be promotional.

But even when it launches commercial operations, expected to be later this year, its tariffs are going to be much cheaper than rivals.

At the annual general meeting of Reliance Industries last June, Chairman Mukesh Ambani said Jio would offer data and voice services at half or less than half the existing rates at .`300-500 a month.

When Jio launches its services commercially, it is expected to offer instant messaging, live TV, movies-on-demand, news, streaming music and a digital payments platform.

The company is positioning itself as a digital content company to distinguish it from other mobile phone operators in the intensely competitive Indian market.

Explaining Airtel’s possible strategy in the event of a price war, Vittal said even if there is a significant reduction in tariffs, what matters is the average revenue per user. Airtel would focus on maintaining the average revenue it earned per user, he said. For that, it could offer additional bandwidth to higher-paying users even as it would pressurise its returns form data.

“One strategy could be I throw in a lot more goodies for high customers with high ARPU of say more than .`500. That will certainly put pressure on realisation of data as more data will be consumed; that is exactly what is happening today,” Vittal added.

“The question then really is do you have that capacity and network to support that experience,” he said, adding that one of the reasons why Airtel launched Project Leap was that from a network perspective, from a capacity perspective the company had an absolutely world class network.

Airtel has been beefing up its spectrum holding ahead of Jio’s launch. According to an internal report of Bank of America Merill Lynch, “Bharti is the best placed operator with 19% (post Videocon’s spectrum acquisition) spectrum market share with Jio being number 2 with 17%”. Last month the company further bought 4G spectrum from Aircel in eight circles.

“All I am saying is that we have to play our game. For us, what our competitors do in future is a highly speculative topic,” Vittal said. “What we have to ensure is that from a network perspective we have a great experience.”

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